I had the most interesting chat with a local Hampstead
landlord the other day about my thoughts on the Hampstead property market. The
subject of the affordability of renting in Hampstead came up in conversation
and how that would affect tenant demand. Everyone wants a roof over their head,
and since the Second World War,
owning one’s home has been an aspiration of many Brits. However, with rents at record highs, many are
struggling to save enough for a house deposit.
Let’s be
honest, it’s easy to get stuck in a cycle of paying the rent and bills and not
saving, but even saving just a small amount each month will sooner or later add
up. George Osborne announced such
schemes as the upcoming Help to Buy ISA ,
where the Government will top up a first time buyers deposit.
Therefore, I
thought I would do some research into the Hampstead property market and share
with you my findings. Hampstead tenants
spend on average over half of their salary to have a roof
over their head. According to my latest
monthly research, the average cost of renting a home in Hampstead is £3,561 per
month. When the average annual salary of
a Hampstead worker, stands at £51,955 per year that means the average Hampstead
tenant is paying 82.2% of their salary in rent. (Now have four fifths of your
salary go on rent is unattainable, so you can see why people share.) I doubt there is much left to save for a
deposit towards a house after that, and that my Hampstead Property Blog reading
friends is such a shame for the youngsters of Hampstead.
You see one the reasons for rents being so high is property
prices being high. As I have mentioned
before, there is a severe lack of new properties being built in Hampstead. It’s the classic demand vs supply scenario,
where demand has increased, but the number of houses being built hasn’t
increased at the same level. Also,
Hampstead people aren’t moving home as often as they did in the 80’s and 90’s,
meaning there are fewer properties on the market to buy. If you recall, a few weeks ago I said back in
Summer 2008, there were over 1,607 properties for sale in Hampstead and since
then this has steadily declined year on year, so now there are only 744 for
sale in the suburb.
So, the planners in Hampstead haven’t allowed enough
properties to be built in the suburb and existing Hampstead homeowners are not
moving home as much as they used to, thus creating a double hit on the number
of properties to buy. This is a long
term thing and the continuing diminishing
supply of housing has been happening for a number of decades and there simply
aren’t enough properties in Hampstead to match demand, these are the reasons
houses prices in Hampstead have remained quite buoyant, even though
economically, over the last 5 years, it was one of the worst on record for the
country and the London region as a whole.
However,
things might not be all doom and gloom as originally thought, as a recent
Halifax Survey (their Generation Rent
2015 Survey) suggested more and more
people may be long term, if not lifelong tenants. In fact there is evidence in
the report to suggest that the perception of how difficult it is to get on the
housing ladder is vastly different between parents and people aged 20 to
45. It seems from this survey that the state of the UK economy has
shifted priorities quite significantly in quite a short space of
time. With fewer people able to save up the deposit required by
mortgage lenders, more and more people are continuing to rent. This delay in moving up the property ladder
has driven rents across the UK up as more
people were seeking rental properties .
It is often said that more people in central Europe rent for longer or never own their own property.
The last two census in 2001 and 2011 show that proportionally the percentage of
people who own their own home in Britain is slowly reducing and, as a country,
we are becoming more and more like Germany.
That isn’t a bad thing as Germany is considered to have a more
successful economy, one of the main stays, often quoted, is because they have a much more flexible and
mobile workforce, (which renting certainly gives) and from that, they have a
higher personal income than in the UK.
Therefore, if we are turning into a more European model and the
youngsters of Hampstead and the Country have changed their attitudes, demand
for rental properties will only and can only go from strength to strength, good
news for Hampstead tenants as wages will start to rise and good news for
Hampstead landlords, especially as property values in Hampstead are now 8.2%
higher than year ago!
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.
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